WTI falls as EIA draw offset API build, Russian sanctions limit downside
- WTI slips toward $59.00 on Wednesday, declining 2.80% on the day.
- API data showed a build in US Crude stocks, while the Energy Information Administration reported a sharp drawdown.
- Upcoming US sanctions on Rosneft and Lukoil could help limit the downside in Oil prices.
West Texas Intermediate (WTI) US Oil trades around $59.00 on Wednesday at the time of writing, down 2.80% on the day. The price remains under pressure as traders weigh mixed US inventory data and monitor escalating geopolitical risks linked to upcoming sanctions on major Russian producers.
According to the American Petroleum Institute (API), US Crude Oil stockpiles for the week ending November 14 rose by 4.4 million barrels, following a 1.3 million barrel increase the previous week. These figures initially added bearish pressure, reinforcing the perception that US supply has been running above seasonal averages so far this year.
However, the more closely watched report from the Energy Information Administration (EIA) revealed a very different picture earlier in the day. Official data showed a draw of 3.426 million barrels, compared with expectations for a 1.9 million barrel decline and after a substantial 6.413 million barrel build in the prior week. This divergence helped curb deeper losses in WTI, as traders typically regard EIA data as the more reliable gauge of underlying market balance.
Beyond inventories, geopolitical developments continue to influence sentiment. The United States (US) is preparing to enforce sanctions on Russian Oil companies Rosneft and Lukoil starting Friday. The US Department of the Treasury has stated that the measures introduced in October are already pressuring Russia’s Oil revenues and are expected to reduce export volumes over time. Any signs of persistent geopolitical strain could lend support to Oil prices by tightening global supply.
Overall, WTI remains caught between conflicting forces. The API’s inventory build and broad risk-off sentiment are weighing on prices, while the sharp EIA draw and looming Russian sanctions are helping cushion the decline, keeping the benchmark near $59.00.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
Author
Ghiles Guezout
FXStreet
Ghiles Guezout is a Market Analyst with a strong background in stock market investments, trading, and cryptocurrencies. He combines fundamental and technical analysis skills to identify market opportunities.
